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The Court of Appeals of Minnesota upheld a lower court’s decision to compel arbitration of a sales dispute between two business entities, despite confusion over the proper filing of the arbitration claim.
In Skytech, Inc. v. Scientific Learning Corp., No. A06-269, 2006 WL 3490908 (Minn. Ct. App. Dec. 5, 2006), Skytech entered into an agreement with Scientific Learning Corporation (SLC) to sell SLC’s computer software to churches and community organizations. The business arrangement fell through, and SLC terminated the agreement.
Skytech first attempted to file an arbitration claim in Dallas, Texas, but abandoned this effort and filed suit in Minnesota state court. Subsequently, SLC filed a proper arbitration claim in California, and filed a motion to compel arbitration and dismiss Skytech’s claims in the Minnesota court.
The Court granted the motion to compel arbitration and dismissed Skytech’s lawsuit without prejudice. Skytech argued that arbitration could not proceed because there had been two separate arbitration claims filed. However, Skytech offered no supporting legal authority, and the Court determined that the Dallas filing had immediately been labeled as “not properly filed.” Thus, the arbitration was allowed to proceed in California, as stipulated by the choice of law and venue provisions in the agreement.
Skytech also asserted that the costs of arbitration were unconscionable, and “it was reasonable [for Skytech] to expect respondent to pay for the arbitration.” However, Skytech cited language from a U.S. Supreme Court case that was only applicable to arbitration costs preventing consumers from vindicating their statutory rights. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (2000). Here, Skytech and SLC were both business entities, and the Court found no unconscionability in this “arms-length transaction.”
Finally, Skytech contended that certain provisions of the agreement limiting liability were also unconscionable. Since this question related to the validity of the underlying contract, however, the issue was left for the arbitrator, not the courts, to decide. Buckeye Check Cashing, Inc. v. Cardegna, 126 S.Ct. 1204, 1210 (2006).
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